Certified Government Financial Manager (CGFM) Practice Exam 2026 - Free CGFM Practice Questions and Study Guide

Imposed nonexchange revenue transactions are typically recognized when a legal claim to funds is established. This means that the government has a legal right to the revenue and can enforce the collection of that revenue. Such transactions often stem from assessments like taxes or fines, where the government imposes a financial obligation on individuals or entities, creating a legal entitlement to receive those funds when they are due.

The recognition of revenue in the context of imposed nonexchange transactions relies heavily on fulfilling this legal claim aspect. Once the government has established its right to the funds, it can correctly recognize the revenue associated with that transaction, following the relevant accounting principles and standards, such as those outlined in GASB (Governmental Accounting Standards Board) guidelines.

The other choices represent conditions that are important but do not directly lead to revenue recognition for imposed nonexchange transactions. For instance, eligibility requirements primarily relate to grants or contributions, while funds being transferred pertains to the cash flow rather than the recognition of revenue itself. Revenue from sales activities also aligns more with exchange transactions, where goods or services are provided in return for payment. Thus, the focus on the legal claim provides a clear frame for understanding when and how revenue is recognized in this context.